<PAGE>
INTERCAPITAL INSURED MUNICIPAL BOND TRUST
Two World Trade Center
New York, New York 10048
DEAR SHAREHOLDER:
- -------------------------------------------------------------------------------
Fixed-income market conditions have steadily improved since late last
year. Bonds began to rally in November 1994 on signs of slower economic
growth in the wake of a progressively tighter Federal Reserve monetary
policy. The recent trend toward lower long-term interest rates is in marked
contrast to most of 1994 when rapidly rising rates created one of the most
severe bear markets for bonds in recent history.
MUNICIPAL MARKET CONDITIONS
Long-term municipal bond yields, as tracked by The Bond Buyer Revenue Bond
Index*, dropped from a high of 7.37 percent in November 1994 to 6.29 percent
at the end of April 1995. This 108 basis point decline in yield corresponded
to a 13 percent price increase for 30-year municipal bonds. Short-term
municipal interest rates remained basically unchanged over the past six
months. Thus, the yield spread or difference between short-term and long-term
municipal bond interest rates narrowed as long rates declined.
The seasonal demand for municipals in December more than offset the
uncertainty caused by the Orange County, California bankruptcy filing. The
market anticipated cash inflows from the reinvestment of coupons and the
proceeds from bond calls and maturities in January at a time of scarce
supply. Tax-exempt bonds outperformed U.S. Treasury bonds through February
1995. The ratio of the Revenue Bond Index yield to the 30-year U.S. Treasury
yield fell from a high of 92 percent in November to 84 percent at the end of
February. A declining ratio means that municipal bond prices have been
stronger than U.S. Treasury prices. Tax reform proposals that advanced the
concept of a flat tax were partially responsible for municipals
underperforming Treasuries in March and April. By the end of April, the
Revenue/Treasury yield ratio had risen to 86 percent.
The pace of new-issue underwriting over the first four months of 1995 was
40 percent below the same period last year. With bond maturities and calls
estimated to exceed new issues coming to market in 1995 the outstanding
supply of municipal securities is expected to decline. This imbalance should
continue to strengthen municipal market conditions.
PERFORMANCE
The net asset value (NAV) of InterCapital Insured Municipal Bond Trust
(IMB) increased from $14.16 to $14.94 per share during the six-month period
ended April 30, 1995. Based on this NAV change plus reinvestment of tax-free
dividends totaling $0.525 per share, the Trust's total NAV return for the
period was 9.46 percent. Concurrently, the Trust's market price on the New
York Stock Exchange rose from $12.875 to $14.50 per share. Based on this
stock price change and reinvestment of dividends, the Trust's total market
return for the period was 16.92 percent. The Trust began the period trading
at a 9.1 percent discount to NAV and closed at a 2.9 percent discount.
- ---------------
* The Bond Buyer Revenue Bond Index is an arithmetic average of the yields of
25 selected municipal revenue bonds with 30-year maturities. Credit ratings
of these bonds range from Aa1 to Baa1 by Moody's and AA+ to A- by Standard &
Poor's.
<PAGE>
PORTFOLIO STRUCTURE
As of April 30, 1995, IMB's long-term investments were diversified among
10 municipal sectors and 39 issuers. The three largest sectors - mortgage
revenue-single family, refunded, and transportation revenue bonds -
represented 55 percent of net assets. The average maturity and call
protection of the Trust's long-term holdings were 23 years and 7 years,
respectively. At the end of the period, the Trust's net assets totaled $108
million.
Each position in the portfolio was backed either by triple "A" bond
insurers or U.S. government guaranteed securities. Municipal bond insurance
supports timely payment of principal and interest. As of April 30, 1995, the
distribution of credit enhancements was:
<TABLE>
<CAPTION>
MUNICIPAL CREDIT ENHANCEMENTS PERCENT
- ----------------------------------------------------- ---------
<S> <C>
AMBAC Indemnity Corporation (AMBAC) .................. 10%
Financial Guaranty Insurance Company (FGIC) ......... 26
Financial Security Assurance Inc. (FSA) .............. 18
Municipal Bond Investors Assurance Corporation (MBIA) 36
GNMA-Backed Obligations .............................. 10
</TABLE>
THE IMPACT OF LEVERAGING
The Trust's common shares continue to be leveraged. As reported
previously, leverage is created through the issuance of auction rate
preferred shares (ARPS). The ARPS auction periods normally range between one
week and one year. Proceeds from ARPS underwritings are used to purchase
additional long-term municipal bonds. Following the payment of ARPS
dividends, the common shares earn incremental income when the portfolio yield
is higher than the cost of the preferred shares (dividend plus operating and
remarketing expenses). Although higher short-term interest rates have
narrowed the yield spread, ARPS continue to provide positive incremental
income to common shareholders.
Leverage also impacts net asset value. ARPS normally account for one-third
of a leveraged municipal bond fund's underwritten capital structure. This
produces a volatility factor for common shares of 1.5 times the price change
of bonds held in the portfolio. Since the value of the preferred shares does
not fluctuate, the NAV of the common shares reflects the full market price
change of the portfolio's investments.
As bond prices eroded in 1994 the degree of leverage and volatility
increased. The purchase and retirement of ARPS mitigated the impact of
leverage. However, as bonds rallied in 1995, leverage improved performance.
Over the last six months, the Trust purchased and retired $5 million in par
amount of ARPS. Currently, $30 million ARPS are outstanding. Additional ARPS
purchases may occur if ARPS become unprofitable (negative yield spread) or
the degree of leverage increases beyond its normal range.
DIVIDEND RESERVES
To more accurately reflect the income being earned by the Trust, on
January 27, 1995 the monthly dividend was reduced from $0.0925 to $0.085 per
share. At the end of April 1995, the Trust had undistributed net investment
income of $0.040 per share versus $0.074 per share on October 31, 1994. This
dividend reserve or "cushion" helps sustain the Trust's current monthly
dividend. Higher yields in future ARPS auctions and ARPS retirements may
further erode the cushion. Declines in this cushion may cause the Trust to
further adjust the common-share dividend.
<PAGE>
LOOKING AHEAD
Slower economic growth in 1995 and the extent of the Federal Reserve
Board's previous interest rate moves have improved bond market expectations.
Investor demand for municipal securities should also be sustained by
significant bond maturities, calls for redemption and diminished new-issue
supply. Changing market conditions and the profitability of ARPS are among
the factors that will continue to determine the Trust's future level of
income and influence its market price.
The Trust's procedure for reinvestment of all dividends and distributions
on common shares is through purchase in the open market. This method helps to
support the market value of the Trust's shares. In addition, we would like to
remind you that the Trustees have approved a procedure whereby the Trust,
when appropriate, may purchase shares in the open market or in privately
negotiated transactions at a price not above market value or net asset value,
whichever is lower at the time of purchase. During the six-month period ended
April 30, 1995, the Trust purchased 13,000 shares of common stock at a
weighted average discount of 9.49 percent. The Trust may also utilize
procedures to reduce or eliminate the amount of outstanding ARPS, including
their purchase in the open market or in privately negotiated transactions.
We appreciate your ongoing support of InterCapital Insured Municipal Bond
Trust and look forward to continuing to serve your investment needs.
Very truly yours,
/s/ Charles A. Fiumefreddo
Charles A. Fiumefreddo
Chairman of the Board
<PAGE>
INTERCAPITAL INSURED MUNICIPAL BOND TRUST
PORTFOLIO OF INVESTMENTS April 30, 1995 (unaudited)
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT (IN COUPON MATURITY
THOUSANDS) RATE DATE VALUE
----------- -------- ---------- --------------
<S> <C> <C> <C> <C>
MUNICIPAL BONDS (97.0%)
GENERAL OBLIGATION (4.7%)
$ 5,000 Cook County, Illinios, Ser 1992 A (MBIA) ........................6.60 % 11/15/22 $ 5,131,400
- ----------- --------------
EDUCATIONAL FACILITIES REVENUE (6.7%)
6,000 Massachusetts Health & Educational Facilities Authority,
Boston University 1991 Ser K & L (MBIA) ........................6.60 10/01/31 6,202,020
1,000 Pennsylvania Higher Educational Facilities Authority, Duquesne
University Refg Ser A of 1991 (MBIA) ...........................6.75 04/01/20 1,036,860
- ----------- --------------
7,000 7,238,880
- ----------- --------------
ELECTRIC REVENUE (5.5%)
1,000 Grand Haven, Michigan, Refg 1993 Ser (MBIA) .....................5.25 07/01/16 900,700
3,000 Piedmont Municipal Power Agency, South Carolina, 1991 Refg Ser
(FGIC) .........................................................6.50 01/01/11 3,105,720
2,000 Snohomish County Public Utility District #1, Washington, 1993
Ser (FGIC) .....................................................6.00 01/01/18 1,918,540
- ----------- --------------
6,000 5,924,960
- ----------- --------------
HOSPITAL REVENUE (8.9%)
2,000 Connecticut Health & Educational Facilities Authority, Yale-New
Haven Hospital Ser F (MBIA) ....................................7.10 07/01/25 2,167,680
3,000 Jacksonville Health Facilities Authority, Florida, New
Children's Hospital at Baptist Medical Center Ser 1991 (MBIA) .7.00 06/01/21 3,215,070
3,000 Illinois Health Facilities Authority, Memorial Medical Center
Ser 1989 (MBIA) ................................................6.75 10/01/11 3,147,630
1,000 Nebraska Investment Finance Authority, Methodist Health System
Inc Ser 1991 (MBIA) ............................................7.00 03/01/06 1,096,430
- ----------- --------------
9,000 9,626,810
- ----------- --------------
INDUSTRIAL DEVELOPMENT/POLLUTION CONTROL REVENUE (10.4%)
2,500 Jasper County, Indiana, Northern Indiana Public Service Co
Collateralized Ser 1991 (MBIA) .................................7.10 07/01/17 2,660,400
1,000 Rockport, Indiana, Indiana & Michigan Power Co Ser B (Secondary
FGIC) ..........................................................7.60 03/01/16 1,105,460
1,000 Burlington, Kansas, Kansas Gas & Electric Co Ser 1991 (MBIA) ...7.00 06/01/31 1,074,340
3,000 New Hampshire Industrial Development Authority, Canal Electric
Co (AMT) (FGIC) ................................................7.375 12/01/20 3,214,170
3,000 New York State Environmental Facilities Corporation, Jamaica
Water Supply Co Ser 1989 (AMT) (Secondary AMBAC) ...............7.625 04/01/29 3,227,610
- ----------- --------------
10,500 11,281,980
- ----------- --------------
MORTGAGE REVENUE - SINGLE FAMILY (31.4%)
1,815 District of Columbia Housing Finance Agency, GNMA Collateralized
Ser 1988 E (AMT) ...............................................7.70 12/01/22 1,917,184
305 Hawaii Housing Finance & Development Corporation,
Ser 1989 A (AMT) (Bifurcated FSA) ..............................7.70 07/01/29 319,542
1,240 Sedgwick & Shawnee County, Kansas, GNMA Collateralized 1990 Ser
B (AMT) (AMBAC) ................................................7.80 06/01/22 1,312,131
5,000 Maine Housing Authority, Ser 1991 A (Bifurcated FSA) ...........7.40 11/15/22 5,275,050
5,000 Massachusetts Housing Finance Agency, Ser 14 (Bifurcated FSA) ..7.60 12/01/14 5,315,850
1,580 Michigan Housing Development Authority, Ser 1990 D (AMT)
(Bifurcated FSA) ...............................................7.65 12/01/19 1,678,624
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
INTERCAPITAL INSURED MUNICIPAL BOND TRUST
PORTFOLIO OF INVESTMENTS April 30, 1995 (unaudited) (continued)
- -----------------------------------------------------------------------------------------------------------------
PRINCIPAL
AMOUNT (IN COUPON MATURITY
THOUSANDS) RATE DATE VALUE
----------- -------- ---------- --------------
<S> <C> <C> <C> <C>
$ 2,205 Minnesota Housing Finance Agency, Ser 1990 A (AMT) (Bifurcated
FSA) ...........................................................7.85 % 07/01/22 $ 2,331,854
1,885 Missouri Housing Development Commission, GNMA-Backed 1991 Ser A
(AMT) ..........................................................7.375 08/01/23 1,957,233
6,600 Nebraska Investment Finance Authority, GNMA-Backed 1990 Ser 1 &
2 (AMT) ........................................................7.631 09/10/30 6,983,064
620 New Jersey Housing & Mortgage Finance Agency, Home Buyer Ser E
(MBIA) .........................................................7.65 10/01/16 659,116
1,910 Tennessee Housing Development Agency, Homeownership Issue S
(AMT) (Secondary MBIA) .........................................7.625 07/01/22 2,025,345
3,935 Wisconsin Housing & Economic Development Authority,
Homeownership 1991 Ser A (Bifurcated FSA) ......................7.50 09/01/17 4,158,390
- ----------- --------------
32,095 33,933,383
- ----------- --------------
RESOURCE RECOVERY REVENUE (2.2%)
2,200 Connecticut Resource Recovery Authority, Mid-Connecticut 1985
Ser B (MBIA) ...................................................7.875 11/15/12 2,353,736
- ----------- --------------
TRANSPORTATION FACILITIES REVENUE (11.3%)
3,000 Hawaii, Airports Second Ser 1990 (AMT) (FGIC) ...................7.50 07/01/20 3,230,310
2,000 Wayne County, Michigan, Detroit Metropolitan Wayne County
Airport Sub Lien Ser 1991 B (AMT) (MBIA) .......................6.75 12/01/21 2,073,580
5,000 New Hampshire, Turnpike 1991 Refg Ser B & C (FGIC) ..............6.805 11/01/17 5,344,650
1,500 Port of Portland, Oregon, Portland International Airport Ser
Seven B (AMT) (MBIA) ...........................................7.10 07/01/21 1,604,325
- ----------- --------------
11,500 12,252,865
- ----------- --------------
WATER & SEWER REVENUE (3.7%)
2,250 Broward County, Florida, Utility Ser 1991 (FGIC) ................6.00 10/01/20 2,213,842
2,000 Norfolk, Virginia, Water Ser 1993 (AMBAC) .......................5.375 11/01/23 1,812,600
- ----------- --------------
4,250 4,026,442
- ----------- --------------
REFUNDED (12.2%)
2,000 Castaic Lake Water Agency, California, Ser 1990 COPs (MBIA) ....7.125 08/01/16 2,234,880
5,000 Eastern Municipal Water District, California, Water & Sewer Ser
1991 COPs (FGIC) ...............................................6.50 07/01/20 5,439,600
1,000 St Cloud, Minnesota, The Saint Cloud Hospital Ser 1990 B (AMBAC) 7.00 07/01/20 1,108,500
1,000 North Las Vegas, Nevada, Ser 03/01/91 (FGIC) ....................7.125 04/01/11 1,109,250
3,000 Bucks County Industrial Development Authority, Pennsylvania,
Grand View Hospital Ser of 1991 (AMBAC) ........................7.00 07/01/11 3,349,140
- ----------- --------------
12,000 13,241,370
- ----------- --------------
99,545 TOTAL MUNICIPAL BONDS (IDENTIFIED COST $99,160,698) ................................. 105,011,826
- ----------- --------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
INTERCAPITAL INSURED MUNICIPAL BOND TRUST
PORTFOLIO OF INVESTMENTS April 30, 1995 (unaudited) (continued)
- -----------------------------------------------------------------------------------------------------------------
PRINCIPAL
AMOUNT (IN COUPON MATURITY
THOUSANDS) RATE DATE VALUE
----------- -------- ---------- --------------
<S> <C> <C> <C> <C>
SHORT-TERM MUNICIPAL OBLIGATIONS (1.2%)
$ 1,000 East Baton Rouge, Louisiana, Exxon Corp Ser 1993 (Tender
05/01/95) ......................................................4.90%* 03/01/22 $1,000,000
300 Louisiana Offshore Terminal Authority, LOOP Inc Ser 1992 A
(Tender 05/01/95) ..............................................5.10 * 09/01/08 300,000
- ----------- --------------
1,300 TOTAL SHORT-TERM MUNICIPAL OBLIGATIONS (IDENTIFIED COST $1,300,000) ..... 1,300,000
- ----------- --------------
$100,845 TOTAL INVESTMENTS (IDENTIFIED COST $100,460,698) (A)............ 98.2% 106,311,826
==========
CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES ................ 1.8 1,948,734
------- -------------
NET ASSETS .....................................................100.0% $108,260,560
======== =============
<FN>
- ---------------
Bond Insurance:
- ---------------
AMBAC AMBAC Indemnity Corporation.
FGIC Financial Guaranty Insurance Company.
FSA Financial Security Assurance Inc.
MBIA Municipal Bond Investors Assurance Corporation.
AMT Alternative Minimum Tax.
COPs Certificates of Participation.
* Variable or floating rate securities. Coupon rate shown reflects current
rate.
(a) The aggregate cost for federal income tax purposes is $100,460,698; the
aggregate gross unrealized appreciation is $6,141,484 and the aggregate gross
unrealized depreciation is $290,356, resulting in net unrealized appreciation
of $5,851,128.
</TABLE>
See Notes to Financial Statements
- -----------------------------------------------------------------------------
GEOGRAPHIC SUMMARY OF INVESTMENTS
Based on Market Value as a Percent of Net Assets
April 30, 1995 (unaudited)
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
California .......... 7.1%
Connecticut ......... 4.2
District of Columbia 1.8
Florida ............. 5.0
Hawaii .............. 3.3
Illinois ............ 7.6
Indiana ............. 3.5
Kansas .............. 2.2%
Louisiana ........... 1.2
Maine ............... 4.9
Massachusetts ....... 10.6
Michigan ............ 4.3
Minnesota ........... 3.2
Missouri ............ 1.8
Nebraska ............ 7.4%
Nevada .............. 1.0
New Hampshire ....... 7.9
New Jersey .......... 0.6
New York ............ 3.0
Oregon .............. 1.5
Pennsylvania ........ 4.0
South Carolina ...... 2.9%
Tennessee ........... 1.9
Virginia ............ 1.7
Washington .......... 1.8
Wisconsin ........... 3.8
------
Total ............... 98.2%
======
</TABLE>
<PAGE>
INTERCAPITAL INSURED MUNICIPAL BOND TRUST
FINANCIAL STATEMENTS
- -----------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
April 30, 1995 (unaudited)
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
ASSETS:
Investments in securities, at value
(identified cost $100,460,698) ......... $106,311,826
Cash .................................... 77,800
Interest receivable ..................... 1,945,024
Deferred organizational expenses ....... 6,744
Prepaid expenses ........................ 17,601
--------------
TOTAL ASSETS ........................ 108,358,995
--------------
LIABILITIES:
Investment management fee payable ...... 31,380
Accrued expenses ........................ 67,055
--------------
TOTAL LIABILITIES ................... 98,435
--------------
NET ASSETS:
Preferred shares of beneficial interest,
(1,000,000 shares authorized of
non-participating $.01 par value, 600
shares outstanding) .................... 30,000,000
--------------
Common shares of beneficial interest,
(unlimited shares authorized of $.01
par value, 5,238,113 shares
outstanding) ........................... 72,351,481
Net unrealized appreciation ............. 5,851,128
Accumulated undistributed net investment
income ................................. 210,158
Accumulated net realized loss ........... (152,207)
--------------
NET ASSETS APPLICABLE TO
COMMON SHAREHOLDERS .............. 78,260,560
--------------
TOTAL NET ASSETS .................... $108,260,560
==============
NET ASSET VALUE PER COMMON SHARE,
($78,260,560 divided by 5,238,113
common shares outstanding) ............. $14.94
==============
</TABLE>
STATEMENT OF OPERATIONS For the six months
ended April 30, 1995 (unaudited)
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
NET INVESTMENT INCOME:
INTEREST INCOME ....................... $3,524,718
------------
EXPENSES
Investment management fee ............ 184,538
Professional fees .................... 49,503
Auction commission fees .............. 39,176
Transfer agent fees and expenses .... 19,408
Trustees' fees and expenses .......... 15,723
Registration fees .................... 9,790
Auction agent fees ................... 9,032
Shareholder reports and notices ..... 7,247
Organizational expenses .............. 3,991
Other ................................ 7,977
------------
TOTAL EXPENSES ...................... 346,385
------------
NET INVESTMENT INCOME ............... 3,178,333
------------
NET REALIZED AND UNREALIZED GAIN (LOSS):
Net realized loss .................... (5,588)
Net change in unrealized appreciation 4,232,048
------------
NET GAIN ............................ 4,226,460
------------
NET INCREASE ........................ $7,404,793
============
</TABLE>
See notes to Financial Statements
<PAGE>
INTERCAPITAL INSURED MUNICIPAL BOND TRUST
FINANCIAL STATEMENTS (continued)
- -----------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED FOR THE YEAR
APRIL 30, 1995 ENDED
(UNAUDITED) OCTOBER 31, 1994
------------------------ ----------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net investment income ........................................ $ 3,178,333 $ 7,028,394
Net realized loss ............................................ (5,588) (67,514)
Net change in unrealized appreciation ........................ 4,232,048 (12,965,757)
-------------- ----------------
Net increase (decrease) ..................................... 7,404,793 (6,004,877)
-------------- ----------------
Dividends from net investment income:
Common ....................................................... (2,751,834) (6,360,938)
Preferred .................................................... (605,863) (1,207,800)
-------------- ----------------
Total ....................................................... (3,357,697) (7,568,738)
-------------- ----------------
Transactions in shares of beneficial interest:
Common ....................................................... (163,890) (79,556)
Preferred .................................................... (5,000,000) (5,000,000)
-------------- ----------------
Total transactions .......................................... (5,163,890) (5,079,556)
-------------- ----------------
Total decrease .............................................. (1,116,794) (18,653,171)
NET ASSETS:
Beginning of period ........................................... 109,377,354 128,030,525
-------------- ----------------
END OF PERIOD (including undistributed net investment income
of $210,158 and $389,522, respectively) ...................... $108,260,560 $109,377,354
============== ================
</TABLE>
See Notes to Financial Statements
<PAGE>
INTERCAPITAL INSURED MUNICIPAL BOND TRUST
NOTES TO FINANCIAL STATEMENTS (unaudited)
- -----------------------------------------------------------------------------
1. ORGANIZATION AND ACCOUNTING POLICIES -- InterCapital Insured Municipal
Bond Trust (the "Trust") is registered under the Investment Company Act of
1940, as amended, as a diversified, closed-end management investment company.
The Trust was organized as a Massachusetts business trust on February 27,
1990 and commenced operations on February 28, 1991.
The following is a summary of significant accounting policies:
A. Valuation of Investments -- Portfolio securities are valued for the
Trust by an outside independent pricing service approved by the
Trustees. The pricing service has informed the Trust that in valuing the
Trust's portfolio securities, it uses both a computerized matrix of
tax-exempt securities and evaluations by its staff, in each case based
on information concerning market transactions and quotations from
dealers which reflect the bid side of the market each day. The Trust's
portfolio securities are thus valued by reference to a combination of
transactions and quotations for the same or other securities believed to
be comparable in quality, coupon, maturity, type of issue, call
provisions, trading characteristics and other features deemed to be
relevant. Short-term debt securities having a maturity date of more than
sixty days at time of purchase are valued on a mark-to-market basis
until sixty days prior to maturity and thereafter at amortized cost
based on their value on the 61st day. Short-term debt securities having
a maturity date of sixty days or less at the time of purchase are valued
at amortized cost.
B. Accounting for Investments -- Security transactions are accounted for
on the trade date (date the order to buy or sell is executed). Realized
gains and losses on security transactions are determined by the
identified cost method. The Trust amortizes premiums and accretes
discounts on securities purchased over the life of the respective
securities. Interest income is accrued daily.
C. Federal Income Tax Status -- It is the Trust's policy to comply with
the requirements of the Internal Revenue Code applicable to regulated
investment companies and to distribute all of its taxable and nontaxable
income to its shareholders. Accordingly, no federal income tax provision
is required.
D. Dividends and Distributions to Shareholders -- The Trust records
dividends and distributions to its shareholders on the ex-dividend date.
The amount of dividends and distributions from net investment income and
net realized capital gains are determined in accordance with federal
income tax regulations which may differ from generally accepted
accounting principles. These "book/tax" differences are either
considered temporary or permanent in nature. To the extent these
differences are permanent in nature, such amounts are reclassified
within the capital accounts based on their federal tax-basis treatment;
temporary differences do not require reclassification. Dividends and
distributions which exceed net investment income and net realized
capital gains for financial reporting purposes but not for tax purposes
are reported as dividends in excess of net investment income or
distributions in excess of net realized capital gains. To the extent
they exceed net investment income and net realized capital gains for tax
purposes, they are reported as distributions of paid-in-capital.
<PAGE>
INTERCAPITAL INSURED MUNICIPAL BOND TRUST
NOTES TO FINANCIAL STATEMENTS (unaudited) (continued)
- -------------------------------------------------------------------------------
E. Organizational Expenses -- Dean Witter InterCapital Inc. (the
"Investment Manager") paid the organizational expenses of the Trust's
common shares in the amount of $40,281. Such expenses have been deferred
and are being amortized by the straight-line method over a period not to
exceed five years from the commencement of operations.
2. INVESTMENT MANAGEMENT AGREEMENT -- Pursuant to an Investment Management
Agreement, the Trust pays its Investment Manager a management fee, calculated
weekly and payable monthly, by applying the annual rate of 0.35% to the
Trust's average weekly net assets.
Under the terms of the Agreement, in addition to managing the Trust's
investments, the Investment Manager maintains certain of the Trust's books
and records and furnishes, at its own expense, office space, facilities,
equipment, clerical, bookkeeping and certain legal services and pays the
salaries of all personnel, including officers of the Trust who are employees
of the Investment Manager. The Investment Manager also bears the cost of
telephone services, heat, light, power and other utilities provided to the
Trust.
3. SECURITY TRANSACTIONS AND TRANSACTIONS WITH AFFILIATES -- The cost of
purchases and proceeds from sales of portfolio securities, excluding
short-term investments, for the six months ended April 30, 1995 aggregated
$-0- and $720,000, respectively.
Dean Witter Trust Company, an affiliate of the Investment Manager, is the
Trust's transfer agent. At April 30, 1995, the Trust had transfer agent fees
and expenses payable of approximately $2,700.
The Trust adopted an unfunded noncontributory defined benefit pension plan
covering all independent Trustees of the Trust who will have served as
independent Trustees for at least five years at the time of retirement.
Benefits under this plan are based on years of service and compensation
during the last five years of service. Aggregate pension costs for the six
months ended April 30, 1995, included in Trustees' fees and expenses in the
Statement of Operations amounted to $5,951. At April 30, 1995, the Trust had
an accrued pension liability of $15,212 which is included in accrued expenses
in the Statement of Assets and Liabilities.
4. PREFERRED SHARES OF BENEFICIAL INTEREST -- The Trust is authorized to
issue up to 1,000,000 non-participating preferred shares of beneficial
interest having a par value of $.01 per share, in one or more series, with
rights as determined by the Trustees, without approval of the common
shareholders. On April 11, 1991, the Trust issued 800 shares of Auction Rate
Preferred Shares ("Preferred Shares") for gross total proceeds of
$40,000,000. The preferred shares have a liquidation value of $50,000 per
share plus the redemption premium, if any, plus accumulated but unpaid
dividends, whether or not declared, thereon to the date of distribution. The
Trust may redeem such shares, in whole or in part, at the original purchase
price of $50,000 per share plus accumulated but unpaid dividends, whether or
not declared, thereon to the date of redemption. During the six months ended
April 30, 1995, the Trust purchased and retired 100 shares in the amount of
$5,000,000.
<PAGE>
INTERCAPITAL INSURED MUNICIPAL BOND TRUST
NOTES TO FINANCIAL STATEMENTS (unaudited) (continued)
- -----------------------------------------------------------------------------
Dividends, which are cumulative, are reset through auction procedures.
<TABLE>
<CAPTION>
RESET RANGE OF
SHARES* RATE* DATE DIVIDEND RATES**
- --------- ------- --------- ----------------
<S> <C> <C> <C>
600 4.50% 5/03/95 3.35% - 6.25%
</TABLE>
- ---------------
* As of April 30, 1995.
** For the six months ended April 30, 1995.
Subsequent to April 30, 1995 and up through May 9, 1995, the Trust paid
dividends to the Series at rates ranging from 4.06% to 4.70%, in the
aggregate amount of $148,554.
The Trust is subject to certain restrictions relating to the preferred
shares. Failure to comply with these restrictions could preclude the Trust
from declaring any distributions to common shareholders or purchasing common
shares and/or could trigger the mandatory redemption of preferred shares at
liquidation value.
The preferred shares, which are entitled to one vote per share, generally
vote with the common shares but vote separately as a class to elect two
Trustees and on any matters affecting the rights of the preferred shares.
5. COMMON SHARES OF BENEFICIAL INTEREST -- Transactions in common shares of
beneficial interest were as follows:
<TABLE>
<CAPTION>
CAPITAL PAID
IN EXCESS OF
SHARES PAR VALUE PAR VALUE
----------- --------- -------------
<S> <C> <C> <C>
Balance, October 31, 1992 and October 31, 1993 ....... 5,257,113 $52,571 $72,542,356
Treasury shares purchased and retired (weighted
average discount 7.34%)* ............................. (6,000) (60) (79,496)
----------- --------- -------------
Balance, October 31, 1994 ............................. 5,251,113 52,511 72,462,860
Treasury shares purchased and retired (weighted
average discount 9.49%)* ............................. (13,000) (130) (163,760)
----------- --------- -------------
Balance, April 30, 1995 ............................... 5,238,113 $52,381 $72,299,100
=========== ========= =============
</TABLE>
- ---------------
* The Trustees have voted to retire the shares purchased.
6. FEDERAL INCOME TAX STATUS -- At October 31, 1994, the Trust had a net
capital loss carryover of approximately $147,000 of which $79,000 will be
available through October 31, 2001 and $68,000 will be available through
October 31, 2002 to offset future capital gains to the extent provided by
regulations.
<PAGE>
INTERCAPITAL INSURED MUNICIPAL BOND TRUST
NOTES TO FINANCIAL STATEMENTS (unaudited) (continued)
- -----------------------------------------------------------------------------
7. DIVIDENDS TO COMMON SHAREHOLDERS -- The Trust has declared the following
dividends from net investment income:
<TABLE>
<CAPTION>
DECLARATION AMOUNT PER
DATE SHARE RECORD DATE PAYABLE DATE
- -------------- ----------- --------------- --------------
<S> <C> <C> <C>
April 25, 1995 $0.085 May 5, 1995 May 19, 1995
June 6, 1995 $0.085 June 16, 1995 June 30, 1995
</TABLE>
8. SELECTED QUARTERLY FINANCIAL DATA --
<TABLE>
<CAPTION>
QUARTERS ENDED
------------------------------------
4/30/95 1/31/95
----------------- -----------------
PER PER
TOTAL* SHARE TOTAL* SHARE
-------- ------- -------- -------
<S> <C> <C> <C> <C>
Total investment income ......... $1,734 $0.33 $1,791 $0.34
Net investment income ........... 1,562 0.30 1,616 0.31
Net realized and unrealized gain 1,947 0.37 2,279 0.43
</TABLE>
<TABLE>
<CAPTION>
QUARTERS ENDED
------------------------------------------------------------------------------
10/31/94 7/31/94 4/30/94 1/31/94
------------------- ----------------- ------------------- -----------------
PER PER PER PER
TOTAL* SHARE TOTAL* SHARE TOTAL* SHARE TOTAL* SHARE
--------- -------- -------- ------- --------- -------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Total investment income ... $ 1,952 $ 0.37 $1,909 $0.36 $ 1,951 $ 0.37 $2,047 $ 0.39
Net investment income ..... 1,742 0.33 1,706 0.33 1,748 0.33 1,832 0.35
Net realized and unrealized
gain (loss) ............... (4,332) (0.83) 368 0.06 (9,010) (1.71) (59) (0.01)
</TABLE>
<TABLE>
<CAPTION>
QUARTERS ENDED
--------------------------------------------------------------------------
10/31/93 7/31/93 4/30/93 1/31/93
----------------- ----------------- ----------------- -----------------
PER PER PER PER
TOTAL* SHARE TOTAL* SHARE TOTAL* SHARE TOTAL* SHARE
-------- ------- -------- ------- -------- ------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Total investment income ... $2,073 $0.39 $2,050 $0.39 $2,075 $0.39 $2,037 $0.39
Net investment income ..... 1,857 0.36 1,840 0.35 1,855 0.35 1,838 0.35
Net realized and unrealized
gain ...................... 2,997 0.57 1,972 0.38 2,181 0.41 3,571 0.68
</TABLE>
- ---------------
* Totals expressed in thousands.
<PAGE>
INTERCAPITAL INSURED MUNICIPAL BOND TRUST
FINANCIAL HIGHLIGHTS
- -----------------------------------------------------------------------------
Selected ratios and per share data for a common share of beneficial interest
outstanding throughout each period:
<TABLE>
<CAPTION>
FOR THE SIX FOR THE PERIOD
MONTHS ENDED FOR THE YEAR ENDED OCTOBER 31, FEBRUARY 28, 1991*
APRIL 30, 1995** ------------------------------ THROUGH
(UNAUDITED) 1994 1993 1992 OCTOBER 31, 1991
--------------- ---- ---- ---- -----------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period ........ $ 14.16 $ 16.75 $ 14.84 $ 14.66 $ 14.06
---------------- ----------- ---------- ---------- ------------------
Net investment income ........................ 0.61 1.34 1.41 1.45 0.86
Net realized and unrealized gain (loss) ..... 0.80 (2.49 ) 2.04 0.09 0.70
---------------- ----------- ---------- ---------- ------------------
Total from investment operations ............. 1.41 (1.15 ) 3.45 1.54 1.56
---------------- ----------- ---------- ---------- ------------------
Less dividends and distributions from:
Net investment income ....................... (0.52) (1.21 ) (1.26 ) (1.08 ) (0.52)
Common share equivalent of dividends paid to
preferred shareholders ..................... (0.11) (0.23 ) (0.24 ) (0.26 ) (0.19)
Net realized gain ........................... -- -- (0.04 ) (0.02 ) --
---------------- ----------- ---------- ---------- ------------------
Total dividends and distributions ............ (0.63) (1.44 ) (1.54 ) (1.36 ) (0.71)
Offering costs charged against capital ...... -- -- -- -- (0.25)
---------------- ----------- ---------- ---------- ------------------
Net asset value, end of period ............... $ 14.94 $ 14.16 $ 16.75 $ 14.84 $ 14.66
================ =========== ========== ========== ==================
Market value, end of period .................. $ 14.50 $ 12.875 $ 17.875 $ 16.375 $ 15.50
================ =========== ========== ========== ==================
TOTAL INVESTMENT RETURN+ ..................... 16.92%(1) (22.37) % 17.74 % 13.05 % 6.89%(1)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) .... $108,261 $109,377 $128,031 $117,998 $117,071
Ratios to average net assets of common
shareholders:
Total expenses .............................. 0.92%(2) 1.03 % 1.01 % 0.99 % 1.00%(2)
Net investment income before preferred stock
dividends .................................. 8.44%(2) 8.68 % 8.86 % 9.61 % 9.16%(2)
Preferred stock dividends ................... 1.61%(2) 1.49 % 1.49 % 1.70 % 1.97%(2)
Net investment income available to common
shareholders ................................ 6.83%(2) 7.19 % 7.37 % 7.91 % 7.19%(2)
Asset coverage on preferred shares at end of
period ...................................... 361% 312 % 319 % 295 % 293%
Portfolio turnover rate ...................... 0% 12 % 6 % 7 % 16%(1)
</TABLE>
- ---------------
* Commencement of operations.
** The per share amounts were computed using an average number of shares
outstanding during the period.
+ Total investment return is based upon the current market value on the
last day of each period reported. Dividends and distributions are assumed
to be reinvested at the prices obtained under the Trust's dividend
reinvestment plan. Total investment return does not reflect sales charges
or brokerage commissions.
(1) Not annualized.
(2) Annualized.
See Notes to Financial Statements
- -----------------------------------------------------------------------------
The financial statements included herein have been taken from the records of
the Trust without examination by the independent accountants and accordingly
they do not express an opinion thereon.
<PAGE>
TRUSTEES
Jack F. Bennett
Michael Bozic
Charles A. Fiumefreddo
Edwin J. Garn
John R. Haire
Dr. Manuel H. Johnson
Paul Kolton
Michael E. Nugent
Philip J. Purcell
John L. Schroeder
OFFICERS
Charles A. Fiumefreddo
Chairman and Chief Executive Officer
Sheldon Curtis
Vice President, Secretary and General Counsel
James F. Willison
Vice President
Thomas F. Caloia
Treasurer
TRANSFER AGENT
Dean Witter Trust Company
Harborside Financial Center - Plaza Two
Jersey City, New Jersey 07311
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP
1177 Avenue of the Americas
New York, New York 10036
INVESTMENT MANAGER
Dean Witter InterCapital Inc.
Two World Trade Center
New York, New York 10048
InterCapital
Insured
Municipal
Bond Trust
Semiannual Report
April 30, 1995
